The US Economy 1970-1970

In this essay I will discuss a few terms and how their relationships apply between regulation and market structures, as well as how regulation policies affect the market.

“For example, the federal government regulates the quality of food and water, the safety of workplaces and airspaces, and the integrity of the banking and finance system.” (Bianco, Canon 2011, p 582) Regulations find out if the product is a market failure. There are two types of regulations, which are economic and social. “Economic regulations sets prices or conditions on entry of firms into an industry, where as social regulation address issues of quality and safety.” (Bianco, Canon 2011, p 582) Economic regulations are concerned with the price regulation of monopolies.

Even though the federal government is the main source of promotion and regulation of industry in America, regulation almost inescapably obstructs success

With all the changes happening in economy during the late 1970’s through the 1980’s how did this make the

(cite 9) Before deregulation there was, and still is regulation in some areas of business and commerce as it relates to transportation. “Regulation consists of requirements the government imposes on private firms and individuals to achieve government’s purposes. These include better and cheaper goods and, protecting existing firms from unfair competition, and economic regulation that limits who can enter a business”. Litan, R. (2008). Regulation in the transportation industry gained momentum in the 1800s after the civil war. The monopoly created by railroads at that time gave birth to many rail carrier abuses and unfair business practices such as the bribing of elected public officials and showing favoritism to preferred customers. They even went so far as to manipulate the price of stocks and bonds on the market by Stifling or eliminating competition. According to Talley, W.(2001) the regulatory periods can be further broken down into three periods; “the Monopoly Era (1800s), the Competition Era (1930s) and the Reform Era

There are several reasons the U.S economy suffered in 70’s. First, the U.S promoted an industrial reconstruction of countries like Japan and Germany. The U.S also develop new manufacturing places in countries where they have fought against communism. All this was done to assist these countries in their reconstruction and survival.

War, corruption, scandal, sounds like the theme for a movie. Actually it describes the atmosphere of our country during the 1970’s. The decade of the 1970’s was a decade filled with political, social, and environmental issues that have had a lasting impact on America today. Some of the issues that affected our country in the first half of the 1970’s carried over from the decade before. One of the first notable events was the Kent State massacre. The year was 1970 and President Richard Nixon stated in a television speech that the United States had invaded Cambodia. Nixon told the American people the invasion was a defensive response to the aggression of the North Vietnamese in Cambodia. He stated that this action would speed up the

This great nation’s economy is powered by the almighty power of capitalism. We are number one when it comes to the size and importance of our budget (US Economy). Ipso Facto during the United States’ prime, many countries wanted to emulate the United States due to their extraordinary financial standing compared to the rest of the World (McBride). This want to push towards United States levels of success has caused many countries to shift to a more capitalistic way of thinking. Capitalism is “a system in which goods and services are offered on the free market, with buyers and sellers coming together to determine the price of those goods and services” (US Economy). During the 1920’s, the amount of

The first antitrust law passed by Congress was the Sherman Act, in 1890. In 1914, Congress passed two other antitrust laws: The Federal Trade Commission Act, which created the Federal Trade Commission, and the Clayton Act. With some revisions, these are the most important federal antitrust laws still in effect today. Section 7 of the Clayton Act prohibits mergers and acquisitions when the effect "may be substantially to lessen competition, or to tend to create a monopoly." (ftc.gov) The antitrust laws proscribe unlawful mergers and business practices in general terms, leaving courts to decide which ones are illegal based on the facts of each case. For over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up. The enforcement authorities of the federal antitrust laws are The Federal Trade Commission and the U.S. Department of Justice (DOJ) Antitrust Division (ftc.gov).

The federal regulation is pervasive. If congress has occupied the field by regulating a subject in great breadth and/or in considerable detail, such action by Congress may suggest an intent to displace state regulation of the subject.

business and causing many workers to lose jobs. In this paper I will point out

3,4- The Airline industry and the market The airline industry is large, specially in the United States, mainly due to the “ Deregulation” of the industry. In 1938, the Civil Aeronautics Board was created to control the growth of the air transportation industry. This board had the authority to control entry, exit, prices and methods of competition. In the late 1970 this structure was found inefficient and in 1978 deregulation took place. Due to the deregulation of the industry competition intensified, prices dropped, and the number of people travelling increased. Many new companies emerged and regional airlines saw deregulation as an opportunity to expand. Due to the rise in competition, by 1986 mergers started to take place and in 1987 64.8% of the market was controlled by the four largest airlines. The demand for air travel is determined mainly by price, studies revealed that half of the leisure travellers and on quarter of business travellers did not have a preference for a particular airline, which means that prices determined the

1. Deregulation of the US airline industry in 1978 ushered in competition in the hitherto protected industry. Several low-cost, low-fare operators entered the competitive market after the deregulation.

Free markets have often been idealized in the US, and have become a dominant tool for trade and distribution of goods and services. There have been multiple waves of government regulation and deregulation of the market in US history. Each of these trends have been grappling with the central question of how sufficient markets are at satisfying our goals. In theory, free markets are fair and efficient at distributing goods and services. In reality, however, government must intervene in the marketplace for two overarching reasons. First, because in practice free markets left to themselves are not always fair and efficient. And second, because fairness and efficiency are not our only goals and

Oligopoly Behavior in the Airline Industry. Case Analysis This case illustrates the pricing behavior of firms that are oligopoly whose market is characterized by the relative few participating firms offering differentiated or standardized products or services. Such firms in an oligopoly have market power derived from barriers of entry that wards off potential participants. As seen in the case, it is clear that because there are a small number of US Airlines firms competing with each other, their behavior is mutually interdependent – thus, the strategies and decisions by one airline management affect managements of the other airlines whose subsequent decisions then affect the first airline. In the airline industry, such oligopolistic